Ryanair now makes passengers pay for priority boarding to keep their main cabin bag with them.
Photograph: Alamy

The Ryanair chief executive, Michael O’Leary, has said the airline may have to review its new luggage policy if large numbers of passengers continue to hand over their bags at the gate.

Ryanair has introduced a stricter cabin bag policy, which means customers have to pay £5 for priority boarding to avoid having their main cabin bag checked in to the hold at the departure gate. This has improved boarding and punctuality, the airline said, but O’Leary added that “it is creating a handling issue, especially at peak periods” such as bank holiday weekends and during the summer.

“There are many flights where we’re now having to put 100 or 120 gate bags free of charge into the hold,” O’Leary said in a video presentation. “If that continues to build, it’s something we may have to look at again.”

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Ryanair’s net profit rose 10% to €1.45bn (£1.27bn) in the year to the end of March, despite a rota fiasco that led to pilot shortages and 10,000 flight cancellations. This forced the budget carrier to recognise unions and raise pay.

However, O’Leary warned of a fall in profits this year, saying the outlook was “on the pessimistic side of cautious”. He said there could be strikes in some countries over Ryanair’s discussions to recognise trade unions, but the airline would face any action down.

The company warned profits would fall back to €1.25bn to €1.35bn in the current year, a decline of up to 14%, due to rising oil prices and nearly €200m of extra staff costs.

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O’Leary said air fares were likely to be flat over the coming year, as it takes about 12 months for changes in fuel prices to feed through to fares. He added that he believed airlines that had not hedged oil prices, such as Norwegian, would struggle next winter and that this would “accelerate the shakeout” in the industry, with some carriers going bust.